Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Why Marissa Mayer is Finally the Right CEO for Yahoo!

How the ex-Googler is shaking things up at the struggling Internet company

The past five years at Yahoo!(Nasdaq: YHOO) have played out like a scene from a dating show, with the company dropping a new CEO in the hot seat year after year, only to be replaced soon after. So it isn’t surprising that discouraged shareholders are weary of Yahoo’s latest union with Marissa Mayer. However, I suspect this time is different. Yahoo! stands to learn a lot from Google’s ex-VP of search products and user experience.

Yahoo’s decision to name a key Google(Nasdaq: GOOG) executive as its new CEO was certainly a daring move. But was it the right one? Five failed chief executive officers in five years (including two interim chiefs) offers proof that reinventing Yahoo! won’t be easy. Let’s take a look at what Mayer brings to the table, and why her arrival is the best thing that’s happened to the struggling web portal in a long time.

A natural leaderThe longtime Googler has never before held the position of CEO, and many analysts worry that Mayer lacks the experience necessary for the role. However, I think it’s a mistake to let this overshadow her professional achievements (of which there are many).

True, Mayer’s corporate strategy for Yahoo! has yet to be proven, though her instinct for success is undeniable. She began her career at Google as the search giant’s first female engineer, and spent the last 13 years helping Google build many of the search products and features that we know and love today, including Google search and Gmail.

In hiring the former Google executive, Yahoo’s board is proving that they’re finally ready for real change. Mayer brings a bold new perspective to Yahoo! that I suspect will have a lasting impact on the company for years to come.

The problem with turnarounds Too many struggling companies grapple for too long with the notion of taking a new approach. Instead, they stick with what they know, fail to innovate alongside the competition, and slowly fade into irrelevancy. Such was the case with Research in Motion(Nasdaq: RIMM), when rival tech giant Apple(Nasdaq: AAPL) entered the smartphone space.

When Apple debuted its first-generation iPhone in 2007, RIM’s co-CEO at the time, Jim Balsillie, dismissed the product as nothing more than a passing phase that would have no lasting effect on his company’s share of the mobile market. The Blackberry maker remained overly confident in its basic email-focused devices, and was slow to adapt. In hindsight, of course, we know this was a mistake.

Today, I no longer believe that RIM has a shot at a comeback. But luckily for Yahoo!, Mayer’s arrival could provide a necessary shift in thinking, at preciously the right time. In fact, the 37-year-old isn’t wasting any time shaking things up at the company.

Prioritizing resourcesMayer’s first major change as Yahoo’s new CEO was to make the food in the company’s cafeteria free for employees. Free food is one way to win over employees, but that’s not the only perk she’s serving up in her new role. Mayer also requires that all Yahoo! employees participate in an all-hands meeting each Friday afternoon.

Mayer is creating a culture at Yahoo! that fosters collaboration and growth, similar to the work environment she enjoyed at Google. At first, these may seem like superficial changes, though a company’s inner workings often invisibly influence key aspects of its business. Incentives such as these should help boost employee morale, as well as help the company retain talent.

Additionally, what Yahoo! needs so desperately now are better products --- an area that Mayer knows well. In fact, in the short time since taking control of the struggling Internet company, Mayer has already refocused efforts toward greater product innovation and user experience.

These are steps in the right direction, but the bigger question for Yahoo! going forward is who the company is to the end user. Is Yahoo! a search engine, web portal, media company, or a combination of these things? As Yahoo’s third CEO in less than a year, determining a clear vision for the company is Mayer’s first major challenge as the new leader.

A long shot with a lot of potential To be clear, plenty of things can still go wrong. Yet, Mayer brings with her a different way of thinking that could be just what the doctor ordered. There's no denying that Yahoo! is in a transitional period. Of course, no shake up is without costs, meaning revenue will likely continue to be squeezed in the near future as Yahoo! works out the kinks of its new leadership style.

However, longer-term, I’m betting on Mayer to outthink the competition and turn things around. Similar to Apple’s transformation after Steve Jobs returned, a comeback for Yahoo! could take years. While we wait to see how Mayer fits into her new role at Yahoo! I encourage you to check out this new premium report highlighting the key opportunities and risks facing Apple today. Best of all, this special report comes with Apple updates for a full year. Click here now to get started, while this offer is still available.

Author

I've been an analytical writer for The Motley Fool since 2011. I cover the sectors of Consumer Goods, Technology, and Industrials. Connect with me on Twitter using the handle, @TamaraRutter -- I'd love to hear from you!
Follow @tamararutter